How can we ensure energy is clean, secure and affordable?

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Shunichi Miyanaga, Chairman of the Board, Mitsubishi Heavy Industries

• The energy industry is at the heart of the global post-COVID-19 recovery.
• But it faces what has been called ‘the energy trilemma’; the conflicting challenges of security, accessibility and environmental sustainability.
• Meeting all three requires a mix of technologies and methods, tailored nationally and locally, rather than a one-size-fits-all approach.

A disruptor and a fresh start, though unexpected: the coronavirus pandemic has brought immeasurable grief and hardship, but it has also created unprecedented momentum for deep and structural change in society and industries.

This year’s Davos Agenda event focuses on how we can build on this dynamic while continuing to fight the devastating effects of the virus. The goal is to shape a new, more resilient, sustainable economic system – and one that can re-establish a level of global cohesion that hasn’t been in evidence for a long time.

Energy is at the heart of this, providing the raw power needed to make the global economy tick. It has also shown us how a few changes can make a significant difference. There was a substantial drop in energy use in 2020, due mostly to restrictions on mobility and social and economic activities. Renewables went on to make up almost 90% of the increase in total power capacity worldwide. At the same time, momentum has continued to build for other carbon-neutral fuels and technologies.

But these are still baby steps. In energy circles, there is a phrase sometimes used to describe the challenges the industry faces: the energy trilemma.

In simple terms, the energy trilemma is about addressing three often conflicting challenges: ensuring energy security, providing energy equity – access to affordable, clean energy – and achieving environmental sustainability.

The question is how we, as a sector, measure up to these three concerns.

1. Providing energy security

How well is a nation prepared to meet current and future energy demand reliably? Can it withstand and bounce back swiftly from system shocks – such as a pandemic – with minimal disruption to supply?

Security inevitably means not relying too heavily on any one single energy solution. Being in a country with a rich wind resource would mean that this would be the best source of electricity, both in terms of environmental impact and affordability.

However, it does little to answer the energy security question. As a variable resource, renewables like wind cannot stand alone but need to be balanced with solutions to even out supply peaks and troughs.

In 2020, we saw significant progress made in this context, starting with strong momentum for building a hydrogen market, as evidenced by new policies from the likes of the European Union.

Alongside, developing and commercializing different types of energy storage – including large-scale batteries – was high on the agenda.

We must also not forget the role of traditional power plants in stabilizing the grid. Where possible, these plants can be decarbonized by converting them to renewable hydrogen or a natural gas/hydrogen fuel mix. Other strategies to minimize environmental impact include using digital tools to run plants more effectively, improving turbine efficiency and adding carbon capture, utilization and storage (CCUS) for any remaining emissions.

Finally, we need to reconsider nuclear energy as a baseload power source, including both modern fission reactors and, eventually, nuclear fusion. The next milestone for the latter will be the ITER demonstration project going live in 2025, featuring 300-tonne field magnets which we built in Japan and shipped to the site in southern France.

2. Equitable access to energy

Universal access to reliable, affordable and abundant energy is still not a given everywhere in the world. Raising the momentum of electrification is of particular importance in emerging economies.

The United Nations projects that, at the current rate of progress, around 620 million people will still lack an electricity supply in 2030 – the year targeted by the Sustainable Development Goals for universal energy access. And this estimate does not consider the impact of COVID-19 on emerging economies.

To stay on target, energy solutions should be tailored to the natural resources and needs of the local population. For example, we are working with a Kenyan utility using the country’s geothermal energy resources, a government drive financed by several multilateral organizations. Similarly, decentralized solutions such as triple hybrid mini-grids, which combine renewable energy with a battery for storage and a back-up generator, will help emerging markets play to their strengths.

Another response to the access challenge is reflected in our partnership with the University of New South Wales to develop a scheme to apply science to the art of balancing competing economic, social and environmental challenges in order to select the most suitable local energy mix. Employing this approach at the level of cities and other relatively smaller urban developments will help ensure more tailored and fairer outcomes.

3. Achieving environmental sustainability

Despite COVID-19, the climate crisis has remained high on the global agenda in 2020. The energy transition is key to mitigating climate change, but it has become clear that this isn’t as simple as a ‘renewables for all’ policy.

In every economy, there are areas – such as heavy industry – where abundant renewable electricity is of little use when large volumes of intense heat or gases are needed as part of manufacturing processes.

Here, a variety of alternative solutions including hydrogen, CCUS and synthetic fuels will play a crucial role alongside renewable electricity.

Steel mills, for example, are expected to ultimately convert to using hydrogen as a source of industrial heat, as well as a means for reduction for iron-oxides.

For others, like the cement industry, CCUS is virtually the only route to make the significant emission cuts needed to comply with the Paris Agreement. Carbon capture is also being explored in shipping to comply with tough CO2 regulations, as is the use of ammonia, methane and methanol that can be deployed in combination with onboard carbon-capture systems.

In recent years, the focus has rightly been on the third of these energy trilemma challenges. But in the post-COVID world, with many economies in recession, reliable and affordable energy supplies for all must also be prioritized if a truly global, cohesive and sustainable economic recovery from the pandemic is to come about.

And this means recognizing that every country, every city and every industry has its own natural resources and energy needs. Becoming sustainable means identifying those energy sources that can do this, in a way that answers each challenge of the energy trilemma.